Folks are running for office- or publicity- and they’ve got a bunch of proposals out there. Because, as we’ve discussed, the Tax Cut & Jobs Act that TheDonald and the GOP provided US taxpayers has escalated our financial woes. The deficit is exploding skyward and the economy is beginning to sniffle.
Elizabeth Warren (whom I respect deeply) has a proposal that sounds wonderful (if you want to sock it to the rich), but is destined for the trash heap. Assuming it could possibly work, this plan would raise nearly $ 2.8 trillion over a decade. But, there is no viable way we could tax household wealth- whether we elect to do so at a $ 50 million threshold or the $ 1 billion level.
Because no one really tracks wealth. Our systems are based upon current income. Moreover, folks have been buying second (or third or fourth) homes using anonymous corporations. How would you be able to tax their wealth? (Remember- each anonymous corporation owns only one item, so it will never reach the threshold Ms. Warren’s plan expects to tax.)
Or, like our illustrious (as in colorful) President, many folks have various valuations for their property. In TheDonald’s case, his insurance company thinks the property is worth X, the lenders who bankroll it are told it’s worth Y, and then he argues with the local authorities (who charge property tax) that it’s only worth 0.1X.
Two other Presidential contenders, Kirsten Gillibrand and Bernie Sanders want to tax financial trades. (That’s something we’ve done before, so it’s a less alien concept.) This concept is doable- and would certainly have the effect of taxing those citizens who are in the upper echelons of the wealth strata. This concept would raise some$ 800 billion over a decade. I would add that we should tax those corporations that are buying back their own stock at an even higher rate. (Even at the same tax rate, it would provide a substantial increase to the treasury.) As a means to stop this practice and have the businesses invest their money in productive uses, instead.
Bernie also wants to bring back the Estate Tax (you know, the one the GOP calls the Death Tax. Actually, they add the death moniker to many things- like the health care panels that exist under PPACA [Obamacare].) Bernie wants the US to tax estates that exceeded $ 1 billion in value at a 77% rate – but also wants to tax estates once they exceed $ 3.5 million, down from the current $ 11 million. (The problem is that too many family farms fall in that range.)
AOC (Congressperson Alexandria Ocasio-Cortez) wants to raise the income tax for those whose income exceeds $ 10 million to 70%, almost twice the current rate of 37%. That sounds really good (at least to some folks), but it won’t affect too many folks in the USA (this is only 0.01% of American taxpayers) or even raise all that much money. (Something on the order of $ 50 to $ 100 billion over ten years would be added to the US Treasury.)
Moreover, AOC’s plan leaves a significant hole. The plan would only make sense (at least to me) if we change the current capital gains tax rules- since these folks (the ones earning $ 10 million) earn most of their money in that fashion- not from W2 income, like most workers. (Which is why the tax rate change proposed by AOC, without my amendment, is more symbolic than effective.) And, then, the plan would actually raise some significant coin.
This is going to be an exciting election season!
All this is giving me a headache. With those figures, I will never have to worry about being in that category.
But, assuming someone chooses a plan that works, it will reduce the chances that the recent tax cut will bankrupt our country- and that WILL benefit you, Martha.
Roy, definitely looking to be an interesting season.. your amendment on the AOC plan sounds sound !!
Thanks for that approbation, Vidya!
Voters want a quick easy fix. That’s not how things work but people vote with their emotions not their intelligence. Too bad.
I am not sure they even vote with their emotions any longer, Alana…They vote with their prejudices.
Nicｅly put, Thanks a lot.
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